How did taking profits become such a sin? Since when do we have to feel guilty about taking something off the table.
While celebrating the 30th birthday of
magazine the other night, I was besieged by plenty of staffers, many of whom had taken action on some of the suggestions I had written about when I wrote for that publication three years ago.
At the time I loved
as well as the banks. Not much different from my current loves, fortunately. All of these stocks have had fabulous, fabulous moves. More than a dozen gracious people thanked me for sharing my views on those stocks with them. In each case I asked whether they had taken anything off the table. In each case they shot me looks liked I had turned bearish, or had discovered a flaw in my own logic. Or that I no longer believed in these companies.
Hardly, I bought a little of everyone of them last week. But I am a great believer in what my wife, the
, pounded into my brains during the seven years we worked together: there are bulls, there are bears, and there are pigs.
Pigs get slaughtered.
The day of reckoning for the market has seemingly extended to infinity. But that doesn't mean that you should let things ride excessively. I know that investing isn't like blackjack, but there is some luck involved or we would never have gotten to 9000. What I don't understand is why people don't just ring the register every once in a while on things they have great gains on.
Let me give you an example. In 1993 my wife bought some
for my mother-in-law at about $12. She reviews my mother-in-law's account every six months to be sure that everything is hunky dorey. She looked at the basis of Maytag, looked at the price -- $50 -- and said it was time to take something off the table and pick a new stock that hasn't had a big run.
I told my wife that I am totally on top of the fundamentals of Maytag, which are terrific, and that I truly wished that she would hold on. She replied that she would with some, but it was time to find some underexploited opportunities. And, she said, "I am not a pig."
My investing style is a pastiche of things fundamental, catalytic and macro, mixed in with good old common sense. To wit, if you have been running around with giant-sized profits and don't want to take them either because of the taxman or because you have been brainwashed into thinking you should never sell, then think again. There is nothing wrong with ringing the register. It is positively sinful to give back big gains. We have been lulled, in this run to 9000, into believing that big sell-offs have been banished from the firmament. That's plainly not true.
Next time you go to a party where you think you might see me -- which is pretty rare because I tend to go home after work -- remember that I'd rather socialize with a bull or a bear than a pig. Cut some of your winnings back and you will never regret it. Give back your winnings and you will never get over it.
Oh, and by the way, my mother-in-law? My wife's idea,
, has done every bit as good as Maytag, even though Maytag pre-announced better than expected earnings in the interim.
Now if you can just keep me out of Kmart, I will make some really good decisions.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. At time of publication his fund was long Microsoft, Cisco, Maytag and Pfizer. As an active trader, he could change those positions at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he welcomes your feedback, emailed to